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Barilla (Italy)

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Barilla is the world's #1 pasta manufacturer. The main international brand is supported by local brands Voiello in Italy, Misko in Greece and Filiz in Turkey among others. The group is also Italy's biggest baked foods company with a wide range of cakes, pastries and crackers under brands including Mulino Bianco, Pavesi, Gran Cereale and Pan di Stelle. Elsewhere, it owns Wasa, which is by far the biggest crispbread brand in Scandinavia, and France's top-selling pre-packaged bread brand Harrys. By concentrating its attention on just two main sectors, Barilla has developed a commanding global presence.

Advertising

Click here for a listing of Barilla Agency Account Assignments from Adbrands.net. The group declared promotional & advertising costs of €275m in 2014.

Competitors

See also Food Sector index for other companies

Brands & Activities

Barilla is Italy's biggest and most international food company. By concentrating its attention on just two main sectors, the group has developed a commanding presence in several international markets, not least the US, where it has overtaken local competitors through aggressive and effective marketing. However the group's more specialised Gran Milano division performed less effectively, while the bakery chain Kamps was forced to deny rumours of financial difficulty during 2006 and was later sold.

Barilla Holding is now the umbrella for two separate food operations controlled by the Barilla family. The combined group has a total of 30 production facilities in 9 countries. The pasta and cracker business is Barilla G&R Fratelli. There are two global business units within this company. The main dried pasta business dominates the Italian market with around 35% share of the branded pasta segment and 31% of ready made pasta sauces. However, the local market has been in steady decline for several years, with many Italians moving to other foods which they consider to be healthier or less fattening. According to Euromonitor, total retail sales of pasta in Italy peaked in 2009 at the equivalent of over $3bn, but have fallen sharply since then, to around $2.3bn in 2013.

As a result, Barilla has pushed aggressively into the international pasta market. In the space of a little more than a decade, it has become the market leader in branded dried pasta in the US, now with around 29% value share and sales of $559m (IRI, 52 weeks to Jan 2014, all channels, Grocery HQ), ahead of private label (27%) and main branded rival New World Pasta Co (20%), the local subsidiary of Grupo Ebro Puleva, which markets Ronzoni and other brands. It has only minimal presence though in the much smaller refrigerated pasta category, dominated by Nestlé's Buitoni. The US pasta market is still growing, and overtook Italy by value for the first time in 2013. However, in order to focus on the US, Barilla took the decision to pull out of some smaller markets, most notably the UK. For almost a decade from 2005, Barilla pasta was not available at all in the UK other than through niche importers. The company finally re-established trading ties with British supermarkets in 2014, but sales are very low, around £10m in 2015.

The group has also emerged as a pioneer in developing new ways of producing such a simple and traditional product as dried pasta. In 2014, it introduced a range of Barilla Pronto pasta that doesn't even need to be boiled or drained. The pasta can be combined with cold water in a pan and left over heat for ten minutes, during which time all the water is absorbed and the product is ready to eat. It has developed a method of creating unique pasta shapes using a 3D printer, and launched a branded oven that reads RFID tags on the raw product to cook it perfectly.

The group restructured in 2001, creating two separate divisions. Primo Piatto houses the group's pasta and associated shelf-stable sauces businesses, under the international Barilla brand, as well as local brands Voiello in Italy, Misko in Greece and Filiz in Turkey. It is the leading pasta marketer in several key markets including Italy, the US, Germany and Australia; and the top-selling pasta sauce brand in Italy and Germany and other countries. In Mexico, the company markets the Yemina and Vesta brands in a joint venture with Herdez group. A range of frozen prepared meals was introduced in Italy in 2004. In 2013, the group opened the first of what are now three Barilla restaurants in New York.

A second division, Prodotti da Forno, houses a large collection of baked goods led by a wide range of Mulino Bianco cookies, cakes, croissants, breadsticks and other products. These are supported by Pavesi cookies and snacks, Gran Cereale and Pan di Stelle biscuits and crackers. Elsewhere, it owns Wasa, which is by far the biggest crispbread brand in Scandinavia, and France's top-selling pre-packaged bread brand Harrys.

A third division in Germany has been sold. In 2002 Barilla acquired Kamps, Germany's dominant retail bakery business, operating a national chain of around 900 franchised bakery shops. However, performance was disappointing and Barilla took the decision to sell on the Kamps retail business in 2010 to venture capital group ECM for an undisclosed sum. It initially retained an associated business, Lieken, which supplies supermarkets and other retailers with private label bakery goods and the Golden Toast and Lieken Ukorn retail brands. However that business too was put up for sale in 2012, and a deal was eventually agreed with Czech company Agrofert in 2013. Several other non-core businesses have been divested in recent years. Gran Milano was spun out of Barilla in 2001, focused around Le Tre Marie cakes and patisserie products. It was sold in 2008. Sanson ice cream and frozen foods were sold to a private equity buyer in 2007. In 2008 the group introduced a new functional health foods line, Alixir, comprising bakery products, snacks and soft drinks designed to aid digestion, circulation and immune systems. It proved very unsuccessful and was closed after a year.

Financials

Group sales have been under pressure for several years. After peaking in 2008 at €4.5bn, they slipped in both of the following years, reaching €3.9bn in 2010. Performance was flat in 2011, but there was a modest improvement in 2012 to just under €4.0bn. The sale of Kamps, as well as the adoption of new accounting rules, caused another decline in revenues, to €3.23bn. There was a modest 2% increase in 2014 to €3.25bn, and then to €3.38bn for 2015. Net profit rose 14% to €144m.

Pasta and related products, such as sauces, accounted for 39% of revenues in 2014, and bakery products for 60%. Italy contributed just under half of revenues, and the rest of Europe a further 47%, with Germany and France the two biggest markets.

The group is now run by Pietro Barilla's three sons, all aged in their early Fifties. The eldest, Guido Barilla, is chairman of the group; his younger brothers Luca and Paolo Barilla are joint deputy chairmen; sister Emanuela is a non-executive director and shareholder. The family owns 85% of the business. The remaining 15% is controlled by the Anda Buehrle family of Switzerland, who helped to fund the reacquisition of the business in 1979.

Background

The company was founded in 1877 by the current owners' great-grandfather Pietro Barilla as a small bakery and pasta shop outside Parma. The first factory was established in 1910 by Pietro's sons Gualterio and Riccardo, after whom Barilla G&R Fratelli is named. By 1936, the business was producing more than 80 tons of pasta and 15 tons of bread per day. After World War II, the company abandoned baking to concentrate on its pasta business, but moved back into bread during the 1960s with the launch of a range of breadsticks, also under the Barilla brand name.

In 1971 Riccardo's sons Pietro and Gianni sold the business to US multinational WR Grace & Co. Gianni retired to Switzerland, but when Grace allowed the business to decline, Pietro Barilla reacquired the business in 1979. Under his guidance, the company expanded rapidly during the 1980s, forming international subsidiaries and overtaking competitor Buitoni (later part of Nestle) to become Italy's biggest food business.

Building on the success of its breadsticks, the company developed its bakery business with a series of acquisitions in the 1970s and 1980s. In 1975 the group launched a range of biscuits under the Mulino Bianco brand. In 1987, Unione Laboratori, makers of Tre Marie cakes and biscuits, were added to the portfolio, followed by fresh bread business Panem two years later. In 1990 the group acquired Greek pasta business Misko, followed by Italian confectioners Pavesi in 1992.

In 1994, Barilla began building a huge wheat mill and pasta factory in Ames, Iowa, at a cost of $130m. A deal with Campbell's Soup led to a range of pasta sauces in 1995, but Barilla added to these by acquiring US brand Sughi in 1997. Back in Italy, the group took on the market-leading fresh pasta company Rana, with the launch of the Parmafresca brand in 1998.

In 1999, Barilla acquired the Swedish biscuit manufacturer Wasa from pharmaceuticals group Novartis, for $316m. At the beginning of 2001 the group broadened its portfolio with the acquisition of Italian ice-cream maker Sanson for €51m; later in the year it bought a leading position in Mexico's pasta sector with the purchase of Kraft's local pasta brands Yemina and Vesta. It sold off charcuterie subsidiary Pamamec to Italian company Parmacotto.

In 2002, the Barilla family made an unsolicited bid for Kamps, Europe's biggest bakery chain. The heavily indebted German company initially rejected an offer of just under €1bn; then reconsidered after the bid was raised to €1.7bn. The deal was finalised in the summer. Since then Barilla has seen demand for its more traditional range of pasta products wane slightly, especially within Italy. In 2004 the company announced plans to restructure pasta production in order to boost profitability, closing a number of factories. This announcement led to industrial disputes at the plants marked for closure towards the end of the year.

In 2013, a storm of controversy erupted over allegedly homophobic comments made by group chairman Guido Barilla. During a radio interview about stereotypical images of women in his advertising, Barilla was asked if he would consider using a gay family to advertise his company's products. "For us the concept of the sacred family remains one of the basic values of the company," he answered. "I wouldn't do an ad with a homosexual family - not because I disrespect gays - they have their right to do whatever they want without disturbing others - but because I don't think like them and I think that the family we try to address is anyway a classic family where the woman has a fundamental role." Asked what he thought gay people might think of that stance, he added "Well, if they like our pasta and our message they will eat it; if they don't like it and they don't like what we say they will eat another pasta." The comments caused an outcry among gay Italians, who called for a boycott of the company's products. Guido Barilla subsequently issued written and video responses to the protest in which he apologised for causing offence (though not for his specific comments) and emphasised his respect for gay people, stating that he had never discriminated against any individual, gay or otherwise. He also pledged to meet with representatives of gay groups to discuss the evolution of family values.

Last full revision 15th December 2015

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